THE PRICE OF SOLAR GOING LOWER AND LOWER

GTM Research’s Module Cost Outlook: 36 Cents Isn’t As Low As You Think; In which we finally admit to not owning a crystal ball.

Shyam Mehta, June 20, 2013 (Greentech Media)

"GTM Research’s latest update on the future of module manufacturing costs…[forecasted a] top-line 2017 base case estimate of $0.36 per watt for low-cost Chinese manufacturers…36 cents per watt at the end of 2017 implies a compounded annual decline of less than 8 percent from Jinko Solar’s reported Q4 2012 manufacturing cost of 54 cents per watt (down to 51 cents per watt in Q1 2013)…

"…That is a very small rate of decline compared to the cost reductions experienced over the past three years. From Q4 2009 to Q4 2012, Trina Solar’s all-in module cost dropped from $1.29 per watt to $0.61 per watt, which is a compounded annual decline of 62 percent…[O]ur base-case forecast has a relatively conservative outlook on metrics such as consumables pricing, plant scale-up and technology parameter trends (increasing automation aside) than in years prior…"

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"…[The] low-case estimate of $0.29 per watt…[shows] there is definitely room to run below our base-case estimate under favorable conditions…[but] cost levels so low would [not necessarily] trigger hitherto unforeseen levels of demand for PV due to price elasticity…[A] reduction of around $0.20 per watt in module prices (from $0.62 per watt at the end of 2012 to $0.42 per watt in 2017) is…[a]ssuming an installed cost of $2.25 per watt for a utility-scale system in the U.S. right now…a system cost reduction of less than 10 percent…[T]he burden of influencing meaningful system cost reductions in the future lies firmly on the shoulders of the BOS side of the equation…

"There is considerable uncertainty involved in forecasting…[A] realistic range for best-in-class manufacturing costs in Q4 2017 is about $0.23 per watt wide, from $0.29 per watt in the low case to $0.52 per watt in the high case…[T]he risk is skewed toward the downside. It’s also worth noting that our low-case projections do not incorporate adoption of a number of advanced technology platforms…all of which could serve to lower manufacturing costs to levels even lower than the numbers laid out here…"

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